FATHI ELLOUMI
Opportunities & Challenges of Strategy Mapping: The case of All Star Foods Canada (ASFC)
FOB Research Forum – January 27, 2012
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If I can’t measure it, I can’t manage it, I can’t
improve it.
FOB Research Forum – January 27, 2012
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Makes vision, mission, and strategy statements meaningful and actionable for employees
Motivation
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Economic uncertainty and business survival
Why do so many business fail? 6 out of 10 businesses fail < 4 years (Knaup, 2005) Poor strategy execution No viable market Lack of competitive advantage Competing Head-to-Head with industry leader Too much leverage Undercapitalizing the business Etc.
A Map is a Must have!
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Question/Objective
FOB Research Forum – January 27, 2012
How to make vision, mission, and strategy statements meaningful and actionable for employees?
Applying BSC as a strategy mapping tool to ASFC to track and monitor capabilities building for future growth and profitability.
Builds on Kaplan (2000, 2002, 2005, 2009), Kaplan & Norton (2000), Schneiderman (1999, 2001), Arveson (2009), and Atkinson et al. (2012)
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Strategy
FOB Research Forum – January 27, 2012
A strategy accomplishes two principal functions:
Creating a competitive advantage by positioning the company in its external environment with resources to support customers better than its competitors
Having a clear strategy provides clear guidance for how internal resources should be used to gain a competitive advantage in the marketplace (Porter , 1996)
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Strategy Map
FOB Research Forum – January 27, 2012
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Learning & Growth
How do we align & enhance our intangible
assets to improve critical process?
Process
To meet our financial & customer objectives, at which process must we
excel?
Customer
To achieve our vision & financial objectives, how must we deliver value to
customers?
Financial
What financial performance should we
deliver for our shareholders?
Mission, vision, & strategy
Kaplan & Norton (2000)
Strategy and the BSC (Kaplan & Norton, 2000)
A BSC tells the story of the business unit’s strategy
A BSC identifies and makes explicit the hypotheses about the cause-and-effect relationships between: Outcome measures in the Financial and Customer
perspectives Performance drivers of those outcomes in the
Internal and Learning and Growth perspectives
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FOB Research Forum – January 27, 2012
BSC Objectives
FOB Research Forum – January 27, 2012
Concise statements that articulate what the organization hopes to accomplish
Action phrasesTell the story of the strategy through the
cause-and-effect relationships
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Schneiderman (1999)
BSC Objectives
Typical objectives found in each of the four BSC perspectives include: (Atkinson et al., 2012) Increase revenues through expanded sales to existing
customers (Financial perspective) Become service oriented (Customer perspective) Achieve excellence in order fulfillment through continuous
process improvements (Internal perspective) Align employee incentives and rewards with the strategy
(Learning and Growth perspective)
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Measures
Provide specificity and reduce the ambiguity that is inherent in word statements
Specifying exactly how an objective is measured will give employees a clear focus for their improvement efforts
Once the objectives have been translated into measures, managers select targets for each measure
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FOB Research Forum – January 27, 2012 Schneiderman (1999, 2001)
Targets and Initiatives
Targets establish the level of performance or rate of improvement required for a measure Should be set to represent excellent performance Should, if achieved, place the company as one of the
best performers in its industry
Initiatives are the short-term programs and action plans that will help achieve the stretch targets established for its measures
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FOB Research Forum – January 27, 2012 Atkinson et al. (2012)
ASFC – the case study
ASFC, Canadian subsidiary of ASF Intl, a large manufacturer of salty snack foods.
Due to disappointing sales growth and financial results ASFC underwent a major restructuring of its senior management team in 2009.
The mandate of the new team was to double the size of Canadian operations and generate pre-tax profit greater than 10% within a five year period.
End 2011. Despite the best efforts of the management team, ASFC is still short of achieving that mandate.
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FOB Research Forum – January 27, 2012
SITUATIONAL ANALYSIS13
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SWOT
ASFC Strategy Gap14
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ASFC Strategic Alternatives
The key issues to be addressed to achieve the mandate:
Identification of a market expansion strategy Improvement in logistics and distribution
networks
The key strategic alternatives identified were:Organic Growth Amalgamate with SSIAcquire Deli Snack
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FOB Research Forum – January 27, 2012
ASFC Strategy Map - Financial
Companies generate revenue growth by: Selling new products Selling to new customers Selling in new markets
Increased productivity occurs by: Lowering direct and indirect expenses Utilizing their financial and physical assets more
efficiently
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FOB Research Forum – January 27, 2012
ASFC Strategy Map - Customer
Identify the targeted customer segments in which the business unit competes and the measures of the business unit’s performance in these targeted segments
This perspective typically includes several common measures of the successful outcomes from a well-formulated and implemented strategy: Achieve customer satisfaction and loyalty Acquire new customers Increase market share Enhance customer profitability
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FOB Research Forum – January 27, 2012
ASFC Strategy Map - Customer
ASFC value proposition? - the unique mix of product, price, service, relationship, and image offered to the targeted customers Defines the company’s strategy Communicates what the company expects to do for its
customers better or differently from its competitorsValue propositions used successfully by different
companies include: “Best buy” or lowest total cost Product innovation and leadership Complete customer solutions
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FOB Research Forum – January 27, 2012
ASFC Value Proposition
FOB Research Forum – January 27, 2012
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“Low-Total-Cost Value Proposition “Deliver a combination of quality, price, and ease of purchase that no one can match”
Low-total-cost
Measures
Be a low cost
supplier
Be a low cost
supplier
Deliver consistent
high quality
Deliver consistent
high quality
Provide a speedy,
easy purchase
Provide a speedy,
easy purchase
Offer appropriate
selection
Offer appropriate
selection
-Price relative to competitors
- Customer’s cost of ownership
-Price relative to competitors
- Customer’s cost of ownership
- # returns; $ value of returns
- # & % customer complaints
- # health incidents
- # returns; $ value of returns
- # & % customer complaints
- # health incidents
- # on-time delivery
- Customer lead time
- % perfect orders
- product-mix growth
- # new product lines
- Product mix range
Adapted from Atkinson et al. (2012)
ASFC Strategy Map - Process
How ASFC will: Create and deliver the value proposition for customers Achieve the productivity improvements for the financial
objectives
ASFC critical processes at which it must excel to achieve its customer, revenue growth, and profitability: Operating processes: day-to-day processes
Day-to-day processes by which companies produce their existing products and services and deliver them to customers
Customer management processes Innovation processes to develop new products & processes Regulatory and social processes to meet regulations/BBP
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FOB Research Forum – January 27, 2012 Arveson (2009)
ASFC Strategy Map – Learning & Growth
ASFC objectives for the people, systems, and organizational alignment that create long-term growth and improvement Define the employee capabilities, skills, technology,
and organizational alignment that will contribute to improving performance in the measures selected in the first three perspectives
Identify investments needed to improve the skills of employees, enhance information technology and systems, and align people to the company’s objectives
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FOB Research Forum – January 27, 2012 Arveson (2009)
ASFC Strategy Map – Learning & Growth
Develop core competencies and skills Encourage employees to gain a broader business
understanding Build the level of skills Develop leadership skills
Provide access to strategic informationEngage and empower employees
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FOB Research Forum – January 27, 2012 Arveson (2009)
Connecting the Four Perspectives
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A strategy map provides a visual representation of the linkages in the four perspectives of the BSC
Financial Perspective Return on Investment
Customer Perspective Customer Loyalty
On-Time Delivery
Process Perspective
Learning and Growth Perspective
Process Quality Cycle Time
Employees’ Process Improvement Skills
Opportunities
The benefits from BSC are realized as the organization integrates its new measurement system into management processes that: Communicate the strategy to all employees and
organizational units Align employees’ individual objectives and incentives
to successful strategy implementation Integrate the strategy with ongoing management
processes
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FOB Research Forum – January 27, 2012
Challenges
Poor organizational process for developing & implementing the scorecard: (Atkinson et al, 2012) Senior management is NOT committed Scorecard responsibilities do not filter down Scorecard is treated as a one-time event BSC treated as a systems project rather than as a
management project
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FOB Research Forum – January 27, 2012